Bayer AG’s garage sale could help fund its acquisition of U.S. seed maker Monsanto Co., according to analysts.

The German pharmaceuticals and chemicals company on Friday said it agreed to sell parts of its crop-science business to rival BASF SE for €5.9 billion ($7 billion). Bayer is looking to divest more of its assets in a bid to secure regulatory approval for the $57 billion deal to take over Monsanto.

Bayer said it would use the net proceeds from the transaction to partially refinance the planned purchase of Monsanto.

“This helps to reduce the size of the planned capital increase,” said Markus Mayer, an analyst at Baader Bank AG in Munich, Germany.

Bayer CFO Johannes Dietsch said earlier this year the company would sell $19 billion in new stock to fund the Monsanto deal. The company last fall issued €4 billion of mandatory convertible euro-bonds.

If Bayer manages to fetch high prices for the other assets it plans to sell, it won’t need to raise as much capital for the Monsanto transaction as previously expected, said Mr. Mayer.

“They might only require $5 billion instead of $10 or $15 billion,” he added. A capital raise could take place at some point in 2018, after the company has secured regulatory approval for the transaction, according to the analyst.

Bayer did not immediately respond to a request for comment.

For BASF, Friday’s deal represents an attractive addition to the company’s portfolio, said Heiko Feber, an analyst with Bankhaus Lampe KG in Düsseldorf, Germany.

It also adds to the company’s debt load. BASF will pay for the assets using a combination of cash on hand, commercial papers and bonds, a company spokesman said. “Net debt will increase accordingly,” the spokesman said. He did not provide more details on the financing mix.

Even if BASF’s latest purchase was financed solely by bonds, it wouldn’t be too much of a drag on the firm’s balance sheet, said Mr. Feber. Net debt totalled €15.6 billion at the end of June, while the company’s net income for the second quarter totalled €1.5 billion. “BASF can certainly shoulder this transaction,” Mr. Feber said.

According to Mr. Mayer’s calculations, BASF can spend up to €18 billion on mergers and acquisitions without having to raise capital and without impacting its A-rating credit rating.

“If Bayer moves to sell further assets, BASF will certainly be interested,” Mr. Mayer said. The company did not comment.

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